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How to Register as a Sole Proprietor in Malta

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November 4, 2020
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Malta - A great place to see the history and the present interchange right before your eyes. Also, a great place to start a small business and profit from the great location and generally beneficial laws. Setting up a sole proprietorship in Malta is not very difficult, but there are a few steps to follow. This is why we have created a straightforward guide that will help you establish your business as fast as possible.

Disclaimer: Be aware that this article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

Register your business

Before you head for the City Hall to officially register your sole proprietorship, you will need to take care of some basic details. The registration itself is fairly easy, and it will only take a few days. The process is a bit more difficult for foreign residents trying to set up a business in Malta, as they will have to register for a social security number before they can start a business.

Registration process for a sole proprietorship consists of:

  • Choosing a name for your business
  • Opening a bank account
  • Acquiring necessary permits and licenses
  • Registering for VAT

Choosing a name for your sole proprietorship

Even though you can operate under your legal name, it is usually recommended to pick a different one for your business, as it could increase your credibility. First you will need to check whether your chosen name is available with the Malta Business Registry.

Setting up a bank account for your sole proprietorship

The next thing on your agenda should be opening a bank account for your business. Malta requires you to have a separate account for your business, whether it is a sole proprietorship or not. So, make sure you have a bank account prepared before you go to register your sole proprietorship.

Permits and licenses: Registering with the right authorities

After you register your company with the Maltese Business Registry, there are still a few things you’ll need to take care of before you can start doing business. First, you will need to get an income tax number. This will be the beginning of the official registration process.

Next, depending on your business and the industry you conduct business in, you might need to apply for special licenses or permits. You can check what particular licences you might need for your specific business at the Department of Commerce of Malta website.

Keep in mind that if you are not a citizen of Malta, there are additional steps you should take before you can register your sole proprietorship and start doing business in Malta. First of all, you will need to acquire a social security number which will allow you to register your company. You can do this online by visiting the official government website of Malta. Additionally, any third country nationals (outside of EU/EEA or Switzerland) are required by law to get a work permit before they can conduct business in Malta.

Registering your sole proprietorship for VAT

Once you are done with opening the bank account and getting all the right licences, it’s time to register your sole proprietorship for VAT (Value Added Tax). There are three ways you can register your business for VAT by filling out this online form - under Article 10, Article 11 and Article 12. In order to register under each of these Articles, you will need to fulfil certain criteria.

You are viable to register under Article 10 if your business:

  • Supplies taxable goods or services in Malta
  • Supplies exempt with credit goods or services in Malta
  • Exports goods outside of the European Union
  • Produces intra-community supplies or provides services that take place in other member states of EU

Sole Proprietors in Malta taxable under Article 10 are eligible to claim input tax for purchases made which are attributable to the supplies. 

You can register under Article 11 if your business:

  • Qualifies as a small undertaking of the VAT Act from 1998
  • Has a turnover that doesn’t exceed the one mentioned in this table

Sole proprietors registered under this Article cannot charge VAT to clients and they can’t claim Input VAT on their expenses. They are, therefore exempt from VAT. Should sole proprietors who fulfil the requirements choose to register under Article 11, they will be exempt from VAT, but will not be able to claim VAT incurred on their business purchases.

Finally, you can choose to register under Article 12 if your sole proprietorship:

  • Is not registered under Article 10
  • Makes intra-community acquisition of goods in Malta that don’t exceed €10,000 in value, in a calendar year;
  • Purchases services from suppliers outside of Malta (both EU and non EU) and whereby the place of taxation of such service is in Malta and where the liability of payment of the tax lies on the customer.

Manage contractors with ease with the help of Deel

Whenever your sole proprietorship needs additional human resources to handle your day to day business, you can hire contractors to assist you. Deel lets you maximize your potential by allowing your sole proprietorship to seamlessly hire, invoice and communicate with contractors all over the world. With Deel, you get access to a centralized platform that allows automatic billing and currency management. Additionally, our legal experts make sure that your contracts are compliant with the local laws and regulations concerning independent contractors. Finally, you get access to 24/7 support in case you need any help or advice.

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